Spain faces general strike as labour reform talks collapse

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Spain faces a general strike following the collapse Thursday of talks on reforming of the country's rigid labour market, widely seen as a crucial step to reviving the struggling economy.

A final meeting between the government, unions and employers ended at dawn without agreement after nearly two years of talks and the government now plans to approve its own version of the reforms at a cabinet meeting on Wednesday.

Amid market fears that Spain is heading towards a Greek-style debt crisis, the International Monetary Fund warned last month that Madrid needed "far-reaching and comprehensive reforms" of its labour market to revive growth and reduce its public deficit.

Spain's two largest unions, the CCOO and the UGT, have threatened a general strike if the government unilaterally imposes reforms that hurt workers.

Socialist Prime Minister Jose Luis Rodriguez Zapatero said his government has "very clear ideas about what needs to be done.

"We want a model that makes permanent contracts the norm, that reduces the cost of firing without sacrificing workers' rights and that clearly changes businesses' flexibility in terms of working hours, conditions and wages," he told reporters during an official visit to Italy.

Spain's unemployment rate has soared from a low of around 8.0 percent in 2007 to 20 percent -- the second highest in the European Union after Latvia -- since the collapse of a property bubble at the end of 2008.

Many economists blame the high jobless rate on Spain's two-tiered labour market, which protects those on permanent contracts with generous severance pay guarantees while those on temporary contracts have few benefits and rights.

During the first quarter of this year, 24.3 percent of Spanish employees were on temporary contracts, according to national statistics institute INE.

"Spain suffers from a historic ill. Every time there is an economic slowdown, our unemployment rate soars to double to European average," said Zapatero.

His government are seven seats short of a majority in parliament but the prime minister said he was confident of getting enough support in the assembly for the reforms.

The talks between the government, unions and employers hit a roadblock over union resistance to proposals to make it less expensive to fire workers on permanent contracts.

Gerardo Diaz Ferran, the chairman of Spanish business association CEOE, blamed the unions for the failure of the talks.

"They do not want to realise the need for this deep reform of the labour market which is being requested by prestigious national and international institutions," he told radio Onda Cero.

CCOO spokesman Fernando Lezcano said the union would study the reforms the government will propose before announcing its "final position."

If unions go ahead with the general strike, it would be the first since Zapatero came to power in 2004.

The ability of unions to mobilise workers, however, has been put in some doubt after a stoppage by civil servants on Tuesday in protest to cuts to their salaries failed to cause widespread disruption to schools, hospitals and other public services.

Unions said 75 percent of public workers heeded the strike call. The government put the participation level at just under 12 percent.

The government slashed public workers' salaries by an average of five percent as part of austerity measures designed to cut the public deficit to the eurozone limit of three percent of Gross Domestic Product by 2013 from 11.2 percent last year.

© 2010 AFP

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